Reorientate UK exports to Bric markets, urges Item Club report

German exports have risen by 21% and US exports by 16% since the recession while British exports are up by just 8%

Containers at Tilbury docks. Ernst and Young Item Club predicts UK exports to Brazil, Russia, India and China will expand by 12% a year over the next decade. Photograph Chris Ratcliffe/Bloomberg News
Chris Ratcliffe/BLOOMBERG NEWS

Voracious demand from China, India and other emerging economies will deliver a bonanza to Britain's exporters over the next decade, according to a new report from a forecasting group, the Ernst & Young Item Club.

Growing overseas trade, aided by the cheaper pound, should be one of the few bright spots for the fragile British economy, but exporters have so far failed to gain significant market share since the recession. While German exports have expanded by 21% and US exports by 16% since the depths of the credit crunch, British exports are up by just 8%.

But Item's economist, Andrew Goodwin, the report's author, suggests that by "reorientating" its trade from western countries to the emerging economies, Britain could deliver a much stronger performance. Item predicts that exports to the "Bric" countries – Brazil, Russia, India and China – will expand by 12% a year over the next decade, contributing to an 8.5% annual increase in overall exports.

At present, almost half (48.7%) of Britain's exports go to EU countries, and less than 5% to the Bric countries. Germany and the US, meanwhile, send more than a 1010th of their exports to the Brics.

Goodwin said government help would be necessary if British firms were to win their fair share of these potentially lucrative markets.

"The government has an important role to play in facilitating the re-orientation of exports towards emerging markets and breaking down the regulatory barriers for companies that wish to break into those countries by developing strong relationships with their governments. Government policy should also be focused on supporting competitiveness through improving skill levels and providing incentives to invest, which would help to close the productivity gap with Germany." He pointed out that Britain's share of world exports had steadily declined, from 10% in the 1950s to just 3% today.

According to the report, UK exporters could cash in on the rapid expansion of the middle class in the Brics, which will lead to greater demand for electrical goods and hi- tech products – traditional strongholds for UK exporters. The top performers by sector, based on annual growth, are electrical goods (11.6%), optical and hi-tech goods (10.4%) and minerals/metals (9%).

The government is planning a series of measures to boost overseas trade and prove that they have a strategy for kickstarting economic growth.On Wednesday, Cable is expected to publish a trade white paper, which will promise to shift the focus of UK Trade & Investment, the government's business promotion agency, towards fast-growing emerging markets. The chancellor, George Osborne, is promising that next month's budget, due on 23 March, will be a "budget for growth".